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Kim or Ocampo: Who can reinvent the World Bank?

Exciting times ahead

The period for submitting nominations for the position of the next President of the World Bank closed on Friday, 23 March. The race is on. Three candidates take part: Jim Yong Kim from the US, José Antonio Ocampo from Columbia, and Ngozi Okonjo-Iweala from Nigeria. Among civil society the candidates provoked already diverging views. WDEV documents comments by Peter Bosshard and Kevin Gallagher.

 

Peter Bosshard: Kim represents a new approach

Jim Yong Kim - a public health expert, president of Dartmouth College and astute rapper - is the US government's candidate for the presidency of the World Bank. As Dani Rodrik, a development expert at Harvard University, summed it up, "it's nice to see that Obama can still surprise us." Will the new candidate, who was not on anybody's shortlist for the position, be able to reinvent the World Bank?

* An embarrassment for the US?

The current process, in which the US and European governments divide up the World Bank and IMF top posts among themselves, is a farce and needs to be changed. Southern governments have put forward Ngozi Okonjo-Iweala and Jose Antonio Ocampo, the finance ministers of Nigeria and (formerly) Colombia, for the position. By nominating a candidate without any experience in global finance and politics, the Obama administration appears to poke a finger in the eyes of these governments. Lant Pritchett, a former World Bank official, has already decried Kim's nomination as "an embarrassment for the US."

Civil society groups from the South and North agree on the need to democratize global governance. The colleagues behind the World Bank President website even carried out a poll among nine potential heavy-weight candidates from developing countries. While I share the critique of the current process, I do not understand why NGO activists need to support representatives of the status quo such as South Africa's finance minister Trevor Manuel or in fact Ngozi Okonjo-Iweala, who was the World Bank's Managing Director for many years.

So what is the track record of the new candidate? In 1987, Jim Yong Kim co-founded Partners In Health, a healthcare non-profit, with four other public health experts. PIH believes that health care is a right, and makes diagnosis and treatment available to all patients for free. The organization supports a preventive approach by promoting people's right to food, water, education and housing. It relies on community activists rather than expensive experts to promote disease prevention and deliver medicines for the treatment of AIDS, tuberculosis and other diseases that afflict the poor.

Through the Institute for Health and Social Justice, PIH also exposes the social and economic roots of the public health crisis in poor countries. In Dying for Growth, a book that was edited by Jim Yong Kim, the Institute documented that lacking access to health care was not a question of insufficient resources but unequal power, and that the economic policies of governments, funders and corporations can deepen the health crisis of the poor. While I cannot claim to know Jim Yong Kim's work in detail, this approach is certainly closer to my heart than the policies espoused by other candidates for the World Bank job.

* Healthcare with social and economic factors in mind

The World Bank needs to reinvent itself. Since Southern financiers have overtaken the institution in terms of lending, this is no longer simply the position of NGO activists. The Bank currently tries to cut its administrative costs by focusing on big, centralized infrastructure projects such as multipurpose dams. As I have shown elsewhere, this approach has bypassed the rural poor since it first became en vogue in the 1950s and 1960s.

Decentralized, bottom-up solutions such as solar panels, improved cooking stoves, treadle pumps and drip irrigation could address the energy and water needs of the poor more effectively than the centralized mega-projects of the past, in the same way that the cell phone revolution has made the landline approach obsolete in the communication sector. The experience that Jim Yong Kim gained with PIH in the villages of Haiti and the slums of Peru could help him understand how to address poverty and injustice through bottom-up solutions.

Could Jim Yong Kim's presidency offer a chance to reinvent the World Bank? Redirecting the supertanker of multilateral development finance will take more than a change of presidents. The entrenched interests in the Bank's management and board will try to prevent a change of course. But why would the Obama administration nominate Jim Yong Kim if it were not prepared to back a new approach?

Again, the selection process for the World Bank presidency needs to change. But Jim Yong Kim appears to be the most interesting and promising candidate regardless of his (US and Korean) passports. The World Bank is facing exciting times.

Peter Bosshard is the policy director of International Rivers. He blogs at www.internationalrivers.org/en/blog/peter-bosshard.



Kevin P Gallagher: Ocampo, not Kim

Emerging countries have gone on the offensive to put an end to the “wink-wink” succession rule whereby Europeans get to choose who heads the International Monetary Fund and the US picks the president of the World Bank. On Friday, developing countries are expected to nominate at least two candidates – Ngozi Okonjo-Iweala, the Nigerian finance minister, and José Antonio Ocampo, former finance minister of Colombia. If the decision is finally based on merit, as it should be, Ocampo will win: he is far and away better than any on the list of credible names, including President Barack Obama’s nominee, Jim Yong Kim.

* A leading development economist

Ocampo has the utmost credibility as a policy-maker and diplomat; he works well with the US and developing countries alike; and he is one of the leading academic economists in the field of development. He is known as a former finance minister but he also served Colombia as minister of agriculture and minister of planning. He has intimate knowledge and experience working with both small and large farmers and on infrastructure and investment projects needed for sustainable growth. This experience will be essential given the current global food crisis.

As finance minister of Colombia he helped the country weather the effects of financial crises in Asia and Latin America. Indeed, he crafted unique and effective measures such as unremunerated reserve requirements whereby foreign investors had to park a certain amount of their capital at the Central Bank. He is now a member of a high-level task force that aims to help nations prevent and mitigate future crises.

Ocampo won points from the US for these efforts and for collaborating with it on a clamp-down on drug-related money-laundering. Colombia is arguably the US’s closest partner in South America and Ocampo has earned the trust of Americans at the highest level. The significance of this should not be overlooked given that it is the US that would have to “give up” the World Bank seat.

His success landed him the presidency of the UN’s Economic Commission for Latin America and the Caribbean – which he turned into Latin America’s premier development institution by refocusing it on open trade, export competitiveness, innovation and policy alleviation. He was then tapped to be UN Under-Secretary General for Economic and Social Affairs, an organization that he also significantly reformed. He improved implementation, created a global development cooperation forum, and held the first ever global conference on international migration and development, earning a truly world-wide reputation as a top notch policy-maker.

* More respect from World Bank staff

Not only would Ocampo have global legitimacy twinned with a special relationship with the US; he would also get more respect from World Bank staff. He has a PhD in economics from Yale and is seen as one of the foremost development economists in academia. He has published widely on labour markets, inequality, public debt, education, macro-economics, industrial innovation, climate change and green development. He has recently been awarded prestigious annual lectureships and prizes at the UN, the World Institute for Development Research and Tufts University.

Okonjo-Iweala also has a PhD in economics and a long history at the World Bank and was a much-heralded finance minister in Nigeria, helping the country to gain its first ever credit rating. That said she was also Robert Zoellick’s second in command. The World Bank has to move on.

Kim, as president of Dartmouth College and a former director of the World Health Organization’s HIV/Aids department, is a rising star and public health is increasingly recognized as a core development issue. However, he lacks recognition among the world’s development community. More importantly, he lacks the experience and knowledge of finance and broad-based development that will be essential as the world continues to recover from the global financial crisis and works to prevent its recurrence.

Beyond public health, a new bank president will face challenges in re-tooling global and national finances for development, food price volatility, filling the massive infrastructure gap, global climate change and competition with Chinese development banks. Kim is not versed on these issues and lacks experience in managing the delicate global, national, and local interests in play.

Rather than listening to the Washington Consensus, many developing countries took matters into their own hands at the turn of the century. Since then the developing world has grown faster than the rich, reduced poverty significantly and avoided the worst of the financial crisis that originated in the US. It would be ironic for the US to dictate the appointment at the World Bank in such an environment.

Kevin P Gallagher is associate professor of international relations at Boston University and co-author of The New Banks in Town: Chinese Finance in Latin America. The article was published first at www.ft.com.

Recommended citation: WDEV documentation (2012) ‘Kim or Ocampo: Who can reinvent the World Bank’, World Economy & Development In Brief (WDEV), Luxembourg, 25 Mar (www.wdev.eu)

Posted: 25 Mar 2012


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